Liquid Number

Being able to meet our obligations is very important. Knowing that you can meet those obligations in the future is more important. Wouldn't you like to know that you'll be able to meet all your obligations in the future, before the future is here? Wouldn't you also like to know that fact with a quick glance at a single number?

Everyone has a liquid number that is unique to them. We like to think of it as a leading indicator. A leading indicator is not something that represents the past, or where you've been. A leading indicator is something that represents how you'll be doing in the future. Too many people get to the end of the month and realize there are more days than dollars. When Wayne Gretzky was asked what made him such a great hockey player, he explained that he does not skate to the puck, he skates to where the puck will be.

Other personal finance tools only allow you to look through the rear-­‐view mirror. Liquid provides you with your Liquid Number, which allows you to look through the windshield. There's a reason why the windshield in your car is larger than the rear-­‐view mirror. Many times larger, as a matter of fact.

Liquid takes the money you've yet to receive for the month, adds your cash and the money in your checking and money market accounts, (what are otherwise known as your cash equivalents,) and subtracts your credit card balances, your upcoming expenses for the month, and anything for which you're saving for in the future, such as that new iPad. The result is your Liquid Number.

Your Liquid Number is a way to view your solvency; it will let you know if you'll be able to meet all your obligations when they come due so you can make adjustments before incurring (more) debt.

Knowing your Liquid Number and monitoring it is your start to a new and better financial life.